For nearly 30 years, it has loomed like a ghost over the carcass of US-Iranian relations - a reminder of how Islamic revolutionaries rendered Washington impotent by holding 52 of its diplomats hostage.

To the US, its former embassy in Tehran conjures humiliating images of classified documents being desperately shredded and captured staff being paraded blindfold before angry jeering crowds after a takeover organised by pro-Khomeini militants.

For Iran's Islamic government, it is the "den of spies" from where the US supposedly tried to sabotage the 1979 revolution that toppled Washington's staunch ally, Mohammad Reza Pahlavi, Iran's last shah.

But yesterday the former embassy - now a museum run by revolutionary guards - was an unlikely focal point of hope after news that the Bush administration plans to establish the first US diplomatic presence in Iran since the 1979-81 siege of the embassy, which lasted 444 days.

Most Iranians passing the property in Talaghani Street were unaware of the Guardian's disclosure of the plans to open a US-staffed diplomatic interest section, a halfway step to full ties.

Conditioned by decades of Iranian government hostility and sabre-rattling over the country's nuclear programme, many shied away from commenting on an issue still seen as sensitive in a society where anti-Americanism is paramount. But others were prepared to cautiously welcome back the nation officially reviled since the revolution as "the Great Satan".

"This would be helpful to our people," Muhammad Hosseinzadegan, an 18-year-old student, said. "The sanctions will go away and the mutual difficulties between the two countries might decrease. I really hope that this quarrel with America ends one day."

Cyrus Mohebbat, the owner of a car accessories shop, said: "I'd be really happy if America opens this office. I think there are only a small number of people in Iran who are opposed to beginning new mutual relationships. Most Iranians will be happy with this."

Yet such euphoria was tempered by an awareness that renewed relations face a wall of mistrust as the US seeks to pressure Tehran into abandoning a uranium enrichment programme that might be used as the initial step towards building a nuclear bomb.

"I think this will ease the negotiation process, but the question is how America is going to open such an office while people close to the government still chant 'Down with the USA'," said one man, who declined to be named. "Iran's nuclear issue is now in a complicated and critical phase. Some think finding a way out is impossible. Rumours of war are widespread and people are asking whether the US will attack or not. It is so oppressive."

Marjan Khajavi, 22, echoed the fear often voiced by the government and its supporters: that renewed ties would revive the servile policy they believe the shah followed towards the US. "I hope one day that these two countries can treat each other as friends and opening a diplomatic interest office would help this. But I'm absolutely against letting America control this country, as they did before the Islamic revolution," she said.

Adel Karimi, 22, a civil engineering student, said the US was no worse than Britain - seen by many Iranians as a traditional enemy. "I think Britain exploits countries as much as the US, so why do we have a British embassy in Tehran and not an American one?"

But Muhammad Ali Benghani, 32, a state employee, voiced the fears that have long steered Iran away from ties with America. "I'm against letting America open such an office," he said. "The US has never been our friend. It always thinks of its own interests, so I don't think they would help Iranians."